How Indian public procurement works: who buys, under which rules, and where

There is no procurement statute

India has no single law that says how the government buys. For the central government the rulebook is the General Financial Rules, 2017, issued by the Department of Expenditure in the Ministry of Finance. The Department's own goods manual says so in terms: “In the Central Government, there is no law exclusively governing public procurement. However, comprehensive Rules and Regulations in this regard are available in the General Financial Rules (GFR), 2017 (especially chapters 6 to 9).”Department of Expenditure, Ministry of Finance

GFR 2017 is a living text. The Department reissues it twice a year with every amendment carried as a footnote naming the office memorandum and its date; the compilation updated to 31 January 2026 is the current one. Chapter 5 deals with works, Chapter 6 with goods and services, and Rule 177 to Rule 206 with consulting and non-consulting services.

Beneath the rules sit four manuals, also from the Department: goods, works, consultancy services and non-consultancy services. They are guidance, not rules, and say so. The consultancy manual's preface: “In case of inconsistencies between this Manual and prevailing law or GFR, the extant law and GFR shall prevail.” The non-consultancy manual carries the same sentence.

For a bidder the order of reading runs the other way: the tender document binds the bid, the manual explains where its wording came from, and the rule decides when the two conflict. The rules walks through them.

Who buys

Rule 144 puts the duty on each buyer rather than on a central purchasing office: “Every authority delegated with the financial powers of procuring goods in public interest shall have the responsibility and accountability” for efficiency, economy, transparency and “fair and equitable treatment of suppliers”. That authority is a ministry, a department, an attached or subordinate office, or an autonomous or statutory body, and each is a separate procuring entity with its own tenders, evaluation committee and paying office.

Central public sector enterprises are in the same list. The e-procurement mandate NIC cites reaches “all Ministries / Department of Central Government their attached and subordinated offices, Central Public Sector Enterprises (CPSEs) and Autonomous / Statutory Bodies”.

GFR 2017 binds the central government only. Each state buys under its own financial rules, and some under a statute of their own: Karnataka's platform “embeds rule-based workflows aligned with the Karnataka Transparency in Public Procurements (KTPP) Act 1999 and Rules 2000”. The state portal is also where the bodies below the state tender; Telangana's “is being used by all Government Departments, Public Sector Undertakings, Urban Local Bodies and Universities in the State”. A contractor bidding to a municipal body there is under the state's rules.

What they buy

Four manuals, because four kinds of purchase are evaluated differently.

• Goods. Equipment, materials, vehicles, consumables. Where the two-envelope system lives: Rule 163 allows bids “in two parts” for “high value plant, machinery etc. of a complex and technical nature”, and in e-procurement the financial bid of a bidder who fails the technical stage “would remain encrypted and unopened”.
• Works. Construction, repair and maintenance. The works manual is written “primarily for Ministries and Departments with limited in house engineering capacity”, with larger works procured through public works organisations. Works tenders are the ones that ask for similar-work experience, turnover and bid capacity.
• Consultancy services. Studies, design, supervision, audit. Quality is scored, not just price, under one of four methods: “Least Cost Selection (LCS)”, “Quality and Cost Based Selection (QCBS)”, “Fixed Budget based Selection (FBS)” or “Single Source Selection (SSS)”. The QCBS weightings are in How the winner is chosen.
• Non-consultancy services. Security, housekeeping, transport, operation and maintenance. A manual of their own under Rule 198 to Rule 206; anything those rules leave out goes back to the goods rules, “and not to the procurement of consulting services”.

Which edition of each manual is current is the subject of Three DoE manuals, 2025.

The value slabs that decide the route

Every central purchase is routed by its estimated value before a bidder sees it. This page states the two lines a contractor meets first.

The advertised line. Under Rule 161(i), an invitation to tender by advertisement is to be used for goods of estimated value ₹50 lakh and above. At or above that line the notice has to be public, which is why an advertised tender enquiry is the one an outsider can find.

The electronic line. NIC's guidelines for the central portal record the Department of Expenditure orders that made e-procurement compulsory for every central purchase with an estimated value of ₹2 lakh or above from 1 April 2016. Anything of that size from a central buyer is bid online, not on paper.

Two more sets of slabs sit beside these. Rule 149 makes the Government e Marketplace mandatory for goods and services available there, and splits GeM buying into three slabs by value: direct purchase, the lowest-priced of several sellers, and online bidding or reverse auction. The slab values were last reset by an office memorandum of 10 July 2024 and are stated in Selling on GeM. Separately, the Make in India order bars a global tender enquiry below a value line it sets, “except with the approval of competent authority as designated by Department of Expenditure”, and reserves that band for Class-I and Class-II local suppliers; the line and the classes are in Class-I, Class-II or non-local.

These are the buyer's rules. A bidder does not choose the route; the estimated value does, and the tender document says which route was taken.

Where it must be published

Two rules give every central notice a home online. Rule 159(i): “It is mandatory for all Ministries/ Departments of the Central Government, their attached and Subordinate Offices and Autonomous /Statutory Bodies to publish their tender enquiries, corrigenda thereon and details of bid awards on the GeM-Central Public Procurement Portal (GeM-CPPP).”Department of Expenditure, Ministry of FinanceRule 160(i): “It is mandatory for Ministries/Departments to receive all bids through e-procurement portals in respect of all procurements.”

That portal is the Central Public Procurement Portal, “designed, hosted and maintained by National Informatics Centre (NIC), in association with Procurement Policy Division, Dept. of Expenditure, Ministry of Finance.” Its e-procurement module “enables the Tenderers to download the Tender Schedule free of cost and then submit the bids online through this portal.”

One distinction there decides where a bid goes: under e-Publishing “the User Organisations will continue to invite bids in paper based format”, while under e-Procurement “the complete tendering, including the submission of bids by the bidders, will be online”. A notice on the central portal is always the notice, but not always where the bid is filed. The portals names where bids are filed instead.

The policies layered on top

Three policies change who may bid, who gets preference and who is asked for less. Each reaches a bidder through the tender document, which says whether it applies.

The MSE order. The Public Procurement Policy for Micro and Small Enterprises Order, 2012, made under the MSMED Act 2006, sets a mandatory share of every central buyer's annual procurement for micro and small enterprises; a Gazette amendment of 9 November 2018 raised that share and earmarked part of it for enterprises owned by women. The share, the price band and the reserved items are in What the MSE policy gives, and does not.

Make in India. The Public Procurement (Preference to Make in India) Order, 2017, revised on 4 June 2020, sorts bidders into three classes by local content (Class-I, Class-II and non-local) and gives Class-I a purchase preference: “If L1 is 'Class-I local supplier', the contract will be awarded to L1.” The thresholds and the margin are in Class-I, Class-II or non-local; where the order sits among the other rules is in The rules.

Bid security and its exemptions. Rule 170 lets a buyer take a signed declaration instead of a deposit, under which a bidder who withdraws or fails to sign “will be suspended for the period of time specified in the request for bids document” from bidding to that buyer. The same rule names the bidders not asked for bid security at all (registered MSEs and DPIIT-recognised start-ups among them), and both are the subject of EMD exemptions and the bid-securing declaration.

Defence and Railways are their own worlds

Two buyers sit outside the pattern, and this page points at them rather than describing them.

Defence. Capital acquisition of ships, aircraft and weapon systems runs under the Defence Acquisition Procedure; the ministry's index page carries DAP 2020, its “Updated Version of DAP - 2020 (upto 18 Apr 2023)” and a “Draft Defence Acquisition Procedure - 2026” put out for comment. Beside it sits the Defence Procurement Manual 2009, hosted on the ministry's own page. The everyday tenders of defence organisations are on a portal of their own, which The portals names.

Railways. Indian Railways does not use NIC's software. Its own system, the Indian Railways E-Procurement System (IREPS), carries the railways' e-tenders. Vendor approval is a separate step inside it: “UVAM is a digitization initiative of Indian Railways through which all the activities related to approval of vendors has been digitized”, and requests are submitted through a vendor's own IREPS account. A supplier new to the railways starts there, not at the tender.

How big it is, in the government's own figures

This page states one thing about size, and it is dated. On 6 April 2026 the Press Information Bureau reported that the Government e Marketplace (one marketplace, not the whole of public procurement) had reached a cumulative order value in the lakh-crore range. That figure, the year's share and the share placed with micro and small enterprises are held in Public procurement in official figures, revised as each release lands.

Oversight and where to go next

The Central Vigilance Commission oversees how the rules are applied; its site hosts a “Public Procurement Manuals” page mirroring the Department's manuals, and its older tendering circulars stand behind rules now written into GFR itself.

The other five reference pages:

• The portals: where notices are published and where bids are filed, by name.
• The tender lifecycle: from the notice inviting tender to the award.
• Money in a bid: the four sums a bid carries and when each comes back.
• The rules: the GFR rules, the manuals, the preference orders and debarment.
• Before you can bid: the digital signature, portal enrolment, the GeM seller profile and Udyam.